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CTP · Question #834
(Topic 9) A publicly-traded U.S. company has a German subsidiary which has accumulated significant cash balances. The company needs to pay its quarterly dividend but lacks the funds to make the…
The correct answer is D. Sign a short-term intercompany loan with the subsidiary. See the full explanation below for the reasoning.
Question
- (Topic 9)
A publicly-traded U.S. company has a German subsidiary which has accumulated significant cash balances. The company needs to pay its quarterly dividend but lacks the funds to make the payment. What is its BEST alternative for obtaining the funds?
Options
- ASell additional shares through a secondary offering.
- BDeclare a one-time intercompany dividend.
- CObtain private equity funding.
- DSign a short-term intercompany loan with the subsidiary.
How the community answered
(21 responses)- A10% (2)
- B5% (1)
- C5% (1)
- D81% (17)
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